KENNEWICK, WASH—A coalition representing dozens of the nation’s smallest credit unions is urging NCUA to rethink a key piece of its latest deregulation proposal, warning that reducing public visibility of member comments on proposed mergers could unintentionally hasten the decline of community-based institutions already fighting to survive.
While applauding the agency’s broader push to streamline rules and cut costs, the Endangered Small Credit Union Defense (ESCUD) said changes tied to merger transparency risk weakening member engagement at a time when nearly three-quarters of small CU CEOs say they are uncertain their institutions will last another decade.
The NCUA proposal ESCUD is addressing is titled "Mergers of Insured Credit Unions Into Other Credit Unions; Voluntary Termination or Conversion of Insured Status," and amends 12 CFR Part 708b.
“It aims to streamline merger processes by eliminating prescriptive formatting requirements for member disclosure statements (such as mandatory bolding, borders, capital letters, and specific font sizes) and discontinuing the NCUA's practice of posting member comments on proposed mergers to a public website,” said Doug Wadsworth, ESCUD president and CEO of Tri-Cities Community Credit Union. “The agency cites low engagement as evidence that the posting requirement provides limited value, thus allowing for cost savings and greater flexibility. That last part is ESCUD’s area of concern.
“After research and discussions with various industry advocacy professionals, I determined that elements of this proposal would likely reduce the engagement and visibility of member comments regarding proposed mergers, which could then accelerate the disappearance of small CUs,” continued Wadsworth. “I understand and empathize with the NCUA’s admirable efforts to cut costs, but this one isn’t going in a direction we are comfortable with. If anything, we would welcome increased member engagement, visibility and scrutiny of proposed mergers, not less.”
ESCUD's concerns, Wadsworth said, stem from ongoing trends showing small credit unions are under increasing pressure. Recent surveys conducted by the group indicate nearly 75% of small CU CEOs are not confident they will survive the next decade, with regulatory compliance costs and growing competitive pressure cited as key factors accelerating mergers or closures.
Wadsworth emphasized ESCUD strongly supports the NCUA's Deregulation Project, viewing nearly all their proposals as positive progress toward easing unnecessary burdens.
"We love the NCUA's focus on cutting costs, removing redundant or overly prescriptive rules, and modernizing oversight," he noted. "It is what all credit unions desperately need, big or small, and we are eager for more."
Wadsworth said he is encouraging dialogue and looking to build advocacy alignment with other credit union organizations around the issue.
"If there is some aspect of this proposal we haven't considered or if you disagree, please contact me, I would love to chat about it,” he said.
Wadsworth can be reached on LinkedIn here.